WALL STREET

GRASSO SIGNALS OPENNESS TO SETTLEMENT WITH SPITZER

The former chairman of the New York Stock Exchange, Dick Grasso, appeared to leave the door open to a settlement of the executive-pay case that was brought against him by the New York attorney general, Eliot Spitzer, in comments he made on CNBC.

Mr. Grasso said if “we could find a path” that would be “mutually beneficial,” then “I think it would be in everyone’s best interests” to reach a settlement.

In his televised comments, Mr. Grasso didn’t spell out the terms of a settlement that would be acceptable to him. “Whether we reconcile this short of an actual trial, that’s for the parties involved to decide,” Mr. Grasso said.

“This was unexpected,” a spokesman for Spitzer’s office, Marc Violette, said.

Mr. Grasso was ousted from the NYSE in September 2003 amid an uproar over his pay package. Mr. Spitzer later sued Mr. Grasso, alleging violations of the state law that governs nonprofit institutions such as the Big Board. Mr. Spitzer wants Mr. Grasso to return a substantial part of his pay. Mr. Grasso is fighting the lawsuit.

In the CNBC interview, Mr. Grasso had kind words for Mr. Spitzer, with whom Mr. Grasso worked during the investigation into stock-research conflicts on Wall Street. On CNBC yesterday, Mr. Grasso was seen shaking hands with Mr. Spitzer’s lawyer on the case, Avi Schick, and patting him on the back. “I think the attorney general has done great things for investors,” Mr. Grasso said. “I take issue with only one case he’s brought during his tenure.”

“We appreciate the sentiment that Mr. Grasso expressed,” Mr. Violette said.

Mr. Grasso’s tone contrasted with the comments he made in May 2004 shortly after Mr. Spitzer sued him, when Mr. Grasso said in a Wall Street Journal Op-Ed piece that Mr. Spitzer’s move against him “smacks of politics.”

– Dow Jones Newswires

CITIGROUP DIRECTORS DIG IN HEELS ON WEILL DEPARTURE

Citigroup’s directors paid Chairman Sanford Weill about $1 billion during his 17-year tenure as chief executive officer. Then, when Mr. Weill announced in 2003 he’d step down as CEO and leave in 2006, they awarded him yearly retirement benefits of more than $1 million.

Now, Mr. Weill, 72, wants to depart ahead of schedule to start his own investment fund while keeping the benefits, and Citigroup’s directors have dug in their heels, people familiar with the matter say. The board fears a public backlash over lavish payouts like that against Morgan Stanley, say the people, who declined to be identified.

The board of Morgan Stanley approved $77.4 million in departure payments for former CEO Phil Purcell and $32 million for former co-president Stephen Crawford. Both men left Morgan Stanley, the world’s biggest securities firm, in the past month after a revolt by investors.

Mr. Weill, who agreed to remain chairman until the 2006 annual shareholder meeting, approached board members months ago about leaving the company earlier to start the buyout fund, according to the people familiar with the issue. The discussions broke down because of disagreements over terms of his contract, they say.

After clashing with earlier proteges, Mr. Weill is now at odds with the board of his handpicked successor, CEO Charles Prince.

– Bloomberg News

FINANCIAL SERVICES

MONEY MANAGER MAY BE RE-INDICTED

The U.S. Attorney’s office in Manhattan expects to file a new indictment next week in the fraud case against philanthropist and money manager Alberto Vilar, a prosecutor said yesterday.

At a hearing, Assistant U.S. Attorney Marc Litt told U.S. District Judge Kenneth Karas that the government expects to file the superceding indictment on Tuesday. He didn’t indicate whether the indictment will include any new charges against Mr. Vilar, head of Amerindo Investment Advisors Incorporated.

Susan Wolfe, who represented Mr. Vilar at yesterday’s hearing, referred questions on the case to her law partner, Jeffrey Hoffman. Mr. Hoffman was out of the office late yesterday and didn’t immediately return a phone call seeking comment.

Mr. Vilar, 64, was arrested in late May on charges that he misappropriated client funds, using them for his personal expenses and for charitable contributions. He has been charged with investment adviser fraud, securities fraud, mail fraud, wire fraud, and four counts of money laundering. He has denied wrongdoing.

Ms. Wolfe told the court yesterday that the law firm of Hoffman & Pollok LLP will represent Mr. Vilar at trial and he won’t need court-appointed counsel. Earlier this month, Susan R. Necheles of Hafetz & Necheles was allowed to step aside as Mr. Vilar’s lawyer.

“That issue has been resolved,” Ms. Wolfe said.

– Dow Jones Newswires

PHARMACEUTICAL

PFIZER NET INCOME RISES 21% Pfizer Incorporated, Roche Holding AG, and Wyeth, three of the world’s biggest drugmakers, reported earnings that exceeded analysts’ estimates on increased demand for medicines to treat the ailments of an aging population.

Net income rose 21% in the second quarter at Pfizer, the world’s biggest drug company, on higher sales of the best-selling Lipitor cholesterol medicine. A Wyeth arthritis drug helped push quarterly earnings up 18%. Roche reported an unexpected first-half profit increase on demand for the Avastin and Tarceva oncology treatments.

– Bloomberg News

TECHNOLOGY

KODAK WILL CUT 10,000 ADDITIONAL JOBS

Eastman Kodak Company, the world’s largest photography company, posted its third straight quarterly loss and said it will eliminate as many as 10,000 more jobs as film sales decline faster than anticipated.

Kodak’s shares tumbled as much as 11% as the company missed analysts’ lowest expectations. The second-quarter net loss was $146 million, or 51 cents a share, the Rochester, N.Y.-based company said in a statement yesterday.

Sales of film-based products including cameras fell 15%, while digital-product revenue rose 43%. Antonio Perez, who became chief executive officer June 1, was counting on cash from film to fund the company’s transition to digital products. Total costs for the shift will almost double to as much as $3 billion with the added job cuts, bringing the total work-force reduction to as many as 25,000.

“They’re letting Perez come in and clean house, but he’s got his hands full,” Chris Hayes of Hayes Fischer Capital Management in Rochester, which owns Kodak shares, said. “They’re running as fast as they can, but they’ve got the marketplace against them in film. Cash is down and debt is up. It’s a rock and a hard place.”

Kodak missed analysts’ earnings expectations for the second straight quarter. Profit excluding costs for job cuts and plant closures was 53 cents a share. On that basis, it was expected to earn 81 cents, the average estimate of eight analysts surveyed by Thomson Financial.

– Bloomberg News